LVMH looks to burnish Vuitton mystique and buoy sales

Fri May 18, 2012 11:56am EDT
 
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By Pascale Denis

PARIS (Reuters) - French luxury giant LVMH is struggling to retain its image as exclusive and high-end creators of $10,000 alligator handbags and goat-lined fur coats, while opening enough stores and reaching enough customers to keep profits high.

Thus far LVMH has managed the balance well, but it is taking no chances, offering customers increasingly expensive and bespoke services in an effort to retain a high-end mystique around brands in danger of becoming ubiquitous.

LVMH is taking particular care to protect the image of Louis Vuitton, the group's signature brand, which accounts for 45 percent of operating profit, and has boasted double digit percentage growth through the financial crisis.

It is the company's cash cow - with estimated revenues of 6.5 billion euros ($8.41 billion) - and analysts estimate that if handled well, Louis Vuitton could see its sales nearly double within seven years, with much of the growth coming from Asia.

"LVMH remains very conscious of the risk that its bags, tied to the relative accessibility of the monogrammed bags, might become too common," said Serge Carrieria, a specialist in luxury brands and professor at the French university L'Institut d'Etudes Politiques de Paris.

Louis Vuitton's revenues are almost double those of rival luxury goods group PPR's Gucci, widely considered its closest French competitor.

THE HERMES MODEL

The company is trying to counter the image that the Louis Vuitton monogram is both too common and easily copied by offering certain customers bespoke leather bags that cost two or three times more than the standard 800 euro Louis Vuitton bag.   Continued...

 
Tourists are pictured in front of a Louis Vuitton boutique in Hollywood, California March 20, 2012. REUTERS/Fred Prouser